Chapter 7 Trade Organization Wto 1995in Addition This Global

Document Type
Test Prep
Book Title
Effective Management 6th Edition
Authors
Chuck Williams
54. A country or region that has an attractive business climate for companies that want to go global has
____.
a.
a large population of unskilled workers
b.
an effective but cost-efficient place to build an office or manufacturing site
c.
a small youth population
d.
natural boundaries
e.
all of these
55. The most important factor used by a globalizing company for determining if a country or a region has
an attractive business climate is ____.
a.
easy access to growing markets
b.
marketplace metamorphosis
c.
global synergy
d.
a large, unskilled workforce
e.
natural boundaries
56. Which of the following factors helps a company determine the growth potential of a foreign market?
a.
political uncertainty
b.
purchasing power
c.
type of infrastructure
d.
land availability
e.
natural boundaries
57. A cosmetics company that is considering entering the South American market would be especially
interested in the discretionary income within that region. In other words, which of the following would
be a determining factor in its global strategy?
a.
purchasing power
b.
political uncertainty
c.
expropriation potential
d.
infrastructure
e.
sociocultural trends
58. Which of the following factors should be considered when choosing an office/manufacturing location
in the Brazilian market for a U.S. company that operates cinemas and wants to open a chain of movie
theatres there?
a.
work force quality
b.
the strategy of the movie theater chain
c.
tariff and nontariff barriers
d.
exchange rates
e.
all of these
59. What are the two types of political risk that affect companies conducting global business?
a.
political uncertainty and policy uncertainty
b.
policy uncertainty and expropriation potential
c.
cultural strength and political risks
d.
infrastructure dynamism and political uncertainty
e.
nationalism and economic uncertainty
60. Uganda is one of only two countries in the world that produce a mineral required in the manufacturing
of cellular phones. Several mining companies recently moved their operations out of the region due to
a bloody civil war resulting from a change in rulers. This is an example of how ____ can influence
global business.
a.
political uncertainty
b.
policy uncertainty
c.
economic risk
d.
infrastructure failure
e.
nationalization
61. The Japanese government decreed that Japanese snow was different from all others and required that
all snow equipment marketed in the country be made in Japan for safety reasons. The elimination of
non-Japanese companies from the market is an example of how ____ can influence global business.
a.
infrastructure modifications
b.
policy uncertainty
c.
political uncertainty
d.
competitive uncertainty
e.
sociocultural modifications
62. What are the strategies that can be used to minimize or adapt to the political risk inherent to global
business?
a.
protectionist, avoidance, and offensive strategies
b.
creative, cooperative, and defensive strategies
c.
cooperative, customary, and nationalistic strategies
d.
avoidance, protectionist, and guerrilla strategies
e.
control, avoidance, and cooperative strategies
63. Uganda is one of only two countries in the world that produce a mineral required in the manufacturing
of cellular phones. A company which mines that rare mineral decided to not invest in the country due
to a bloody civil war resulting from a change in rulers. The mining company used a(n) ____.
a.
avoidance strategy
b.
control strategy
c.
cooperative strategy
d.
elimination strategy
e.
self-protection strategy
64. The Green Giant consumer products company learned that it could not use their Jolly Green Giant
character in parts of Asia where a green hat worn by a man signifies that he has an unfaithful wife.
This is an example of a(n) ____ that influenced global marketing.
a.
geocentric attitude
b.
control strategy
c.
cooperative strategy
d.
cultural difference
e.
avoidance strategy
65. The ____ strategy of minimizing or adapting to the political risk inherent to global business makes use
of joint ventures and collaborative contracts.
a.
defensive
b.
control
c.
cooperation
d.
avoidance
e.
offensive
66. A firm using a ____ strategy to prevent or reduce political risks will lobby foreign governments or
international trade agencies to change laws, regulations, or trade barriers that hurt their business in that
country.
a.
defensive
b.
control
c.
cooperative
d.
protectionist
e.
avoidance
67. ____ is the set of shared values and beliefs that affects the perceptions, decisions, and behavior of
people from a particular country.
a.
National mindset
b.
National culture
c.
Cultural nationalization
d.
Cultural diversity
e.
National diversity
68. Hofstede's research has shown that there are ____.
a.
no cultural differences among nations in which Spanish is the national language
b.
two distinct methods for dealing with cultural differences--adaptation and continuation
c.
direct relationships existing between type of infrastructures and growth potential
d.
five consistent dimensions of cultural differences across countries
e.
four factors upon which a company should base its decision to globalize
69. According to Hofstede, when people in a culture are oriented to the present and seek immediate
gratification, that culture is described as ____.
a.
having a long-term orientation
b.
masculine
c.
having a short-term orientation
d.
individualistic
e.
feminine
70. According to Hofstede's research on cultural dimensions, ____ cultures emphasize the importance of
relationships, modesty, caring for the weak, and quality of life.
a.
economic-based
b.
feminine
c.
relationship-oriented
d.
individualistic
e.
masculine
71. The term ____ is used by Hofstede to describe the degree to which people in a country are
uncomfortable with unstructured, ambiguous, unpredictable situations.
a.
power distance
b.
masculinity
c.
short-term/long-term orientation
d.
uncertainty avoidance
e.
risk aversion
72. An expatriate is someone who ____.
a.
claims dual citizenship
b.
lives and works outside of his or her own country
c.
believes strongly in nationalization
d.
is unhappy with his or her present residence
e.
desires to be employed in a country outside of his or her own
73. The purpose of pre-departure language and cross-cultural training is to ____.
a.
cater to employees who require affective learning
b.
increase job empathy
c.
encourage job specialization
d.
reduce the uncertainty for those becoming expatriates
e.
avoid legal problems in the future
74. The evidence clearly shows that ____ is the most important factor in determining the success or failure
of an international assignment.
a.
the amount of language training provided to the expatriate
b.
the amount of cross-cultural training provided to the expatriate
c.
how well an expatriate's spouse and family adjust to the foreign culture
d.
how willing the expatriate was to accept the foreign assignment
e.
the similarity of the foreign language to the expatriate's native language
75. ____ is used to assess how well managers and their families are likely to adjust to foreign cultures.
a.
cultural awareness screening
b.
sociocultural analysis
c.
sensitivity screening
d.
sociocultural diagnostics
e.
adaptability screening
Coca-Cola
Georgia-based Coca-Cola is reentering the Indian market. Coke is attracted to India’s market because
India’s per capita consumption of carbonated beverages is less than half of Pakistan and about five
percent of China’s, yet India has the fastest-growing demand for consumer products in the world.
Coke’s first attempt to enter the Indian market over a decade ago was plagued by gross
mismanagement, and the company lost 20 billion Indian rupies. In that first attempt, Coke purchased
Thumbs Up, the leading India-based carbonated soft drink. The company hoped to replace Thumbs Up
with Coke, while maintaining the Thumbs Up distribution strategy. For its return to the market, Coke
built five plants, cut costly staff, revamped transport, and reduced the size and weight of bottles in
order to increase a truck’s carrying capacity. It also increased its number of distributors and dumped a
global advertising campaign that proved irrelevant to the Indian market.
76. Refer to Coca-Cola. In its first attempt to enter the Indian market, Coke engaged in ____.
a.
acculturation
b.
direct foreign investment
c.
internal importing
d.
globalization
e.
restraint of trade
77. Refer to Coca-Cola. As a multinational company, Coca-Cola ____.
a.
owns businesses in more than one country
b.
is not affected by protectionism
c.
is able to avoid trade barriers
d.
pays no tariffs
e.
is accurately described by all of these
78. Refer to Coca-Cola. What kind of strategy has Coca-Cola used for its second entry into the Indian
market?
a.
global consistency
b.
market differentiation
c.
market restructuring
d.
local adaptation
e.
acculturation
79. Refer to Coca-Cola. One way Coca-Cola increased distribution of Coke was to enter into a ____ with a
refrigerator manufacturer. In order to ensure that retailers had the proper refrigeration units, Coke
provided the financing needed for the retailers to purchase them, and the refrigeration manufacturer
gave deep price discounts.
a.
franchise agreement
b.
direct investment
c.
strategic alliance
d.
brokered agreement
e.
new-venture strategy
80. Refer to Coca-Cola. The need for Coke to create a promotional strategy specifically targeted to the
Indian market reflects a(n) ____.
a.
diversification strategy
b.
awareness of cultural differences
c.
desire to maintain a high contribution margin
d.
insular approach to strategy
e.
desire to maintain global consistency
WWYD Groupon
Growing from 30 cities in December 2008 to 550 today, Groupon got to $1 billion in sales faster than
any other company. Groupon sends a daily e-mail to its 35 million subscribers offering a discount to a
restaurant, museum, store, or service provider in their city. This “coupon” becomes a “groupon”
because the company offering the discount specifies how many people (i.e., a group) must buy before
the deal “tips.” For example, a local restaurant may require 100 people to buy. If only 90 do, then no
one gets the discount. Daily deals go viral as those who buy send the discount to others who might be
interested. When the deal tips, the company and Groupon split the revenue.
Why would companies sign up, especially since half of the money goes to Groupon? Nearly
all of Groupon’s clients are local companies, which have few cost effective ways of advertising.
Radio, newspapers, and online advertising all require upfront payment (whether they work or not). By
contrast, local companies pay Groupon only after the daily deal attracts enough customers to be
successful.
Because there are few barriers to entry and the basic Web platform is easy to copy, Groupon’s
business has been copied in 50 countries. China alone has 1,000 Groupon-type businesses. So, while
Groupon has grown to $1 billion in sales faster than any other company, competitors threaten to take
much of that business, especially in international markets.
While the Web side of Groupon business works in most places, it doesn’t work everywhere.
Throughout much of the world, online credit cards facilitate quick, easy, and trustworthy payment. In
India, however, Groupon must use cash-on delivery. In other ways, however, Groupon is balancing
consistency with local adaptation. Groupon’s business model suggests that the company could find
itself locked out of key international markets if it doesn’t move quickly to establish itself as a
multinational company. Groupon began buying market leaders that it identified in 50 different
countriesi.e, entrepreneurs to work with that were excellent operators and also understood the local
culture. Groupon first bought a company in Germany and then repeated this acquisition strategy in
Chile, Russia, Japan, China and other locations. One year after deciding to go global, Groupon is in 42
different countries.
While Groupon has local managers to run its businesses in 42 different countries, it brings all
of them to Chicago to learn how to run their offices the way that it’s done in the U.S. Then, it makes
sure that those managers stay current with its client companies by using management software to
ensure that its sales force follows up to address potential issues after every daily deal is completed.
81. Refer to WWYD Groupon. What challenge did Groupon face in going global?
a.
the refusal of some potential global customers to use credit cards online
b.
its Chicago-based call center and HQ
c.
a business model easily replicated by competitors and imitators
d.
policy uncertainty in the United States
e.
political risk in its domestic operations
82. Refer to WWYD Groupon. When a company uses the same policies to run its U.S., U.K., and Indian
operations, it is trying to achieve:
a.
lower costs with the same paperwork here and abroad
b.
perfect adaptation
c.
a consistent global business model
d.
global consistency
e.
simplified logistics
83. Refer to WWYD Groupon. Groupon has instituted a __________ approach to __________ by training
its international cadre of managers in its hometown of Chicago.
a.
culturally sensitive/acquired overseas competitors
b.
fair/cultural differences
c.
balanced/global consistency
d.
critical/global diversification
e.
diversity/global expansion
84. Refer to WWYD Groupon. As a Groupon manager, when you consider such characteristics as
“uncertainty avoidance” (reluctance to use credit cards) or women’s dress (modesty in a Muslim state),
you are recognizing __________ differences.
a.
cultural
b.
economic
c.
sexual
d.
meaningless
e.
demographic
85. Refer to WWYD Groupon. The companies that Groupon purchased in Japan, Chile, Russia, Germany,
and China became _____ of Groupon
a.
strategic partners
b.
wholly owned affiliates
c.
licensees
d.
franchises
e.
outposts
86. Refer to WWYD Groupon. Groupon became a multinational company after it bought a company in:
a.
Germany
b.
Chile
c.
Russia
d.
Japan
e.
China
SHORT ANSWER
1. Define direct foreign investment. Name one of the top five countries with the largest direct foreign
investment in the United States.
2. What are trade barriers and identify the two general kinds of trade barriers used by governments. Give
one example of each.
3. Briefly describe a regional trade agreement and a worldwide trade agreement.
4. Compare and contrast the concepts of global consistency and local adaptation as policies for entering
foreign markets.
5. Briefly explain the phase model of globalization and list its stages in their appropriate order.
6. Briefly explain how companies can assess the growth potential of new markets.
ANS:
7. Identify the two basic types of political risk facing organizations when conducting global business.
Which one is more common?
8. Define national culture. List the five consistent cultural dimensions across countries.
9. Briefly comment on the types of training that should be provided AND to whom that training should
be provided in order to ensure the success of managers who go on international assignments.
ESSAY
1. What are the basic provisions of the General Agreement on Tariffs and Trade (GATT)?. Give three
examples of how it benefits U.S. industries.
2. Explain how the concepts of global consistency and local adaptation are relevant to success of a global
business. Give one example of a good or service that would be likely to succeed with the use of global
consistency. Give one example of a good or service that would be likely to succeed with the use of
local adaptation.
3. What is the phase model of globalization? Identify the factors that have allowed companies to follow
different paths to globalization. Then explain the nature of the global new venture. Comment on the
extent to which it is likely that this latter approach to globalization will increase.
4. Identify and discuss the basic components of an attractive business climate. Comment on the extent to
which a fast food restaurant franchise might make a different assessment of relevant factors than
would a capital-intensive business such as an oil refinery and pipeline company.
5. A married manager with two children has been offered the opportunity to go abroad on an expatriate
assignment for the company in a foreign country for a period of three years. If the manager chooses to
accept the assignment, he or she wants to perform very well in order to continue moving up the
corporate ladder. What sorts of preparations should the manager expect the company to provide in
order to ensure his or her success on the assignment? Comment on these training and preparatory
expectations in an ideal world as well as the real world that the manager probably will face.

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